UK

Instant View: UK manufacturing PMI rebounds more than forecast

Reuters News
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Posted: Jul 02, 2012 4:44 AM
Instant View: UK manufacturing PMI rebounds more than forecast

LONDON (Reuters) - Britain's manufacturing sector contracted for the second straight month in June as new orders continued to fall, a survey showed on Monday, adding to expectations the Bank of England will pump more cash into the struggling economy.

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KEY FIGURES FROM MARKIT/CIPS PMI SURVEY

JUNE MAY APRIL F'CAST

Manufacturing headline index 48.6 45.9 50.1 46.5

New orders index 47.0 42.0 48.8

- Input prices fall at fastest pace since May 2009

- Stocks of finished goods were reduced at the fastest pace for eight months

- Manufacturing employment fell for a second successive month

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ECONOMISTS' VIEWS

PHILIP SHAW, INVESTEC

"This month's numbers are less poor than the May figures but with the overall index and the new orders component still below 50 there is only a modest amount of comfort that one can take from the survey."

"It still seems that the manufacturing sector is contracting and the bounce back in the index does not detract at all for the case for more quantitative easing on Thursday."

"We continue to expect a further 50 billion pounds of asset purchases."

ROSS WALKER, RBS

"The figures are bad in an absolute sense but have bounced more than expected. But (the survey) is still in contractionary/recessionary levels.

"The underlying position of the economy is still pretty weak. If you look through the noise in the surveys and other data, which are a bit mixed, it's telling you that, at best, the economy will grow very slightly in the second half of this year, and we could even have an ongoing contraction.

"I think there'll be a bit of a bounce in Q3, but the underlying position is that the economy looks broadly stagnant. These numbers aren't signaling any improvement in that, and that's what the BoE will be looking at. so I think they're still on track to do more QE this week."

JAMES KNIGHTLEY, ING

"It is important to point out that these are still sub-50 readings mean that the data is merely telling us that the pace of contraction has slowed rather than the sector is expanding."

"Furthermore, the readings are still well down on the April figures and employment in the sector has contracted or the second month in a row."

"Consequently, this is not going to block a further round of quantitative easing from the Bank of England on Thursday given the tone of recent BoE comments and the fact that vote (5-4 against) was so close last time."

(Reporting by UK economics team)


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